Prosperity Index 2010 - Islamic Republic of Iran ranks 92 out of 110

The Legatum Prosperity Index is the world’s only global assessment of wealth and wellbeing.

Unlike other studies that rank countries by actual levels of wealth, life satisfaction or development, the Prosperity Index produces rankings based upon the very foundations of prosperity those factors that will help drive economic growth and produce happy citizens over the long term.

Inflation in Iran is very high, with prices increasing at a rate of more than 26% year on year. At over 10%, the unemployment rate in the workforce is high and is consistent with only 38%* of the population who claimed to be in either paid or unpaid employment. The rate of gross domestic saving is very high at 44% of GDP. However, the proportion of people with adequate access to food and shelter is the 25th lowest*, internationally**, suggesting poor overall living standards. Just 56%* of Iranians are happy with their standard of living, which is below the global average. The proportion of people with a positive view of local employment prospects is 75%*, well below the international average. Optimism towards local economic conditions is slightly better, placing around the global average* and an average GDP growth rate of 4.3% per year between 2004 and 2008 is good by global standards. Iran also has a reasonable foundation for future growth. The amount of physical capital available to workers is above the international average and the country places 31st with respect to its market size. High-tech exports account for 6% of total exports, which is near the international average. Yet foreign direct investment is low and financial sector efficiency is very poor, placing Iran just 84th in the Index. Non-performing loans account for a quarter of all loans. Despite this, two-thirds* of Iranians have confidence in the financial sector, placing the country 41st on this variable.

Royalty receipts in Iran are negligible, despite a rate of R&D spending which accounts for 1.1% of total GDP, well above the global average. ICT exports account for just 0.1% of total exports. Understandably, perceptions of the entrepreneurial environment are very poor, with less than half* of respondents considering their local area a good place to start a business. While average business start-up costs of 3.9% of GNI per capita are low, access to communications technology is poor, indicating a weak infrastructure for entrepreneurship. With six mobile phones for every 10 Iranian citizens, Iran places in the bottom third of the Index on this variable. Internet bandwidth provision places around the global average, while the lack of adequate secure internet servers rank Iran 100th on this variable. There is also a general lack of social mobility in Iran. Pervasive inequality in economic development across different socio-economic groups correlates with just three-quarters* of Iranians agreeing that hard work allows people to get ahead; on both variables, the country places in the bottom half of the Index.

Governance – Ranked 105thIran is a theocratic democracy, which confers very few freedoms to its citizens

Iran is a theocratic democracy. It places 97th with respect to political constraints, indicating that executive power is rarely checked. The country places 93rd with respect to overall government effectiveness, indicating instability and low bureaucratic efficiency. Competition in the executive and legislative branches of government is minimal, and the judiciary lacks full independence from the executive. The country places 100th for regime stability. However, at 60%*, the government’s approval rating is above the international average. Approximately the same proportion* approves of the country’s efforts to preserve the environment although just over a third* of people approve of efforts to address poverty. Perceptions of corruption are high, placing the country 65th*, globally, on this variable. Both the rule of law and the quality of the regulatory environment are very poor by international standards. Almost eight in 10* Iranians have confidence in the military, while 58%* are confident in the judiciary; the country ranks in the top half of the Index on both variables. While political rights are amongst the lowest in the world, 19%* of the population had voiced concern to a public official in the year prior to the survey in 2008, which places the country around the international average on this variable. Despite the nature of the government, over half* of respondents expressed confidence in the honesty of the electoral process in 2008, which is close to the global average.

Education – Ranked 57thIran’s education system is universal at the primary level, but the workforce is only moderately educated

Almost everyone of primary school age goes to school in Iran, with the country achieving the fifth highest enrolment rate in the world, at 99.7%. However, this figure falls to 80% at secondary level and 36% at tertiary level, placing the country 71st and 53rd, respectively, on these variables. There is near gender equality in access to primary and secondary schools. However, subjective indicators are less encouraging. Just 57%* of Iranians profess satisfaction with the quality of education in the country, while 70%* believe children have the opportunity to learn and grow every day. Iran places just below average in terms of the number of teachers, with one teacher for every 20 pupils at primary level. The workforce is only moderately educated by global standards: the average Iranian worker has undertaken 1.6 years of secondary education and 0.7 years of tertiary education, ranking the country below the global average on both variables.

Health – Ranked 60th Despite low life expectancy, most Iranians are reasonably content with their health

The rate of infant mortality in Iran is close to 3%, higher than the international average. Healthadjusted life expectancy is 58 years, placing the country 78th, globally, on this variable. However, undernourishment across the country is very low and rates of immunisation against infectious diseases and measles are very high, at 99% and 97%, respectively. Iran invests relatively heavily in its health infrastructure; the average annual health spending of more than $700 (PPP) per capita places Iran 45th, globally, on this variable. Yet provision of hospital beds is below the international average. Deaths from respiratory diseases are relatively low, and the incidence of tuberculosis is below the global average. Just 83% of the population has access to adequate sanitation facilities, placing Iran in the bottom half of the Index on this variable. Iran also ranks poorly in terms of citizens’ satisfaction the quality of their water, placing it 90th* on this variable. In terms of subjective measurements, Iran performs moderately well: at 82%*, the proportion of people who are satisfied with their personal health is high and just 22%* of people complain of debilitating health problems. However, just over a third* of people were worried the previous day, exceeding the international average, and just 62%* of Iranians report being well-rested, which is very low by international standards. A very low 58%* of respondents were satisfied with their environmental surroundings.

Safety & Security – Ranked 99th Iran faces major challenges with respect to both national and personal security

Iran has many national security challenges, including large numbers of refugees and internally displaced people, as well as many occurrences of group grievances. Demographic instability resulting from border disputes, ownership or occupancy of land, access to transportation outlets, control of religious or historical sites, or proximity to environmental hazards produce less serious concerns. Human flight is also a significant problem, with many professionals, intellectuals, political dissidents, and members of the middle class choosing to emigrate. The country ranks very poorly with respect to state-sponsored political terrorism. However, there were no reports of civil or ethnic strife in 2008, the year of the survey. Personal security issues also pose significant challenges. At 7%*, the proportion of respondents who were assaulted in the 12 months prior to the 2008 survey was above the international average, placing the country 70th on this variable. The proportion of people who were the victim of theft was even worse, placing the country just 90th, globally. Just 57%* of Iranians feel safe walking alone at night, also placing Iran below the international average. No data were available regarding individuals’ willingness to express their political views.

Civil liberties, which include freedoms of expression, belief, association, and personal autonomy, are extremely low in Iran, placing this country amongst the lowest 10 nations in the Index. Although approximately six out of 10 Iranians are satisfied with their level of free choice, Iran is placed 88th in the Index, on this variable. Perceived tolerance towards outsiders is also very low. Just three and five out of 10 people consider their local area to be a good place for immigrants and racial and ethnic minorities, placing Iran 104th and 97th, respectively, on these variables.

Social Capital – Ranked 106th Social capital is weak in Iran suggesting low levels of social engagement

At just over one in 10 people*, the proportion of Iranians that express trust in others ranks in the bottom 20 countries, worldwide. Although 36%* of respondents had donated money to charity in the month prior to being surveyed in 2008, just 12%* had volunteered their time, and just 39%* had helped a stranger; Iran ranks 86th and 71st, respectively, on the latter two variables. Just over 63%* of citizens rely on family and friends in times of need, which ranks very poorly internationally. At 57%*, the proportion of respondents who were married is above the global average, indicating the potential for access to familial support networks. However, only 46%* of Iranians had attended a religious service in the previous seven days, placing Iran around the global average on this variable, and indicating that access to religious support networks are only moderately strong in Iran.

* Data taken from the Gallup World Poll ** The terms ‘international’, ‘global’, or ‘world’ are used to reference the 110 Prosperity Index countries, which represent approximately 93% of the world’s population and 97% of global GDP.